Cozen O’Connor’s Real Estate team has decades of experience advising clients on a vast array of distressed real estate scenarios, including workouts, restructurings, foreclosures, bankruptcies, and capital rescues. Whether the distress is due to project-specific difficulties or market-wide disruptions, we design tailored solutions for each client to protect rights, stabilize finances, enable fulfillment of obligations, and maximize recoverable assets.

Experience

Our team represents landlords, ground lessees, tenants, mortgage and mezzanine lenders (including commercial and investment banks, mortgage REITS, and private equity funds), joint venturers, borrowers, guarantors, developers, and construction companies with significant interests in all categories of real estate assets. We work on behalf of clients throughout the capital structure and debt stack to analyze the underlying causes and severity of the distress in order to determine appropriate course of action:

• Advise on pre-negotiation agreements, loan restructuring, forbearance and extension agreements, recapitalizations, and refinancing
• Develop business proposals to attract additional capital and/or new investors
• Scrutinize loan, joint venture, and lease documentation
• Evaluate non-recourse carve-out guarantees, completion, and carry guarantees
• Assess liability exposure
• Review potential lien priority and perfection issues
• Evaluate and pursue foreclosure, deed-in-lieu, receivership, forced sale, short sale, and bankruptcy options
• Coordinate the orderly restructuring or wind down of owners, subsidiaries, and leases

Services

With distressed real estate, every issue is interconnected — a party’s obligations under its lending facility will be affected by a breach of financial covenants; provisions under a joint venture agreement may be impacted by rising costs; otherwise desirable strategies may have negative tax implications, triggering capital gains and cancellation of debt income; formulas governing contributions and distributions in multi-party agreements are so complex that one point of weakness can generate distress throughout a project, even in an up market.

Clients need counsel with a high-level understanding of how all the pieces fit together. Cozen O’Connor has a full-service platform and the in-house capability to advise on all aspects of distressed real estate:

• Lease Restructuring. Work with a diverse client base to restructure leases in the context of distressed real estate. We are often able to develop tailored amendments or modifications to lease documents that support workable debt service coverage ratios. Where lease modifications are not viable, we assist clients in connection with the wind down and surrender of distressed leasehold assets and facilitate the smooth transfer of premises.
• Bankruptcy, Insolvency & Restructuring. Advise on debtors’ and creditors’ rights both inside and outside of formal bankruptcy proceedings. The team can assess how the potential future bankruptcy of various stakeholders will affect complex real estate financings, how to structure/restructure financings to address bankruptcy risk, and how to assert or respond to a declaration of bankruptcy.

We also represent opportunistic investors, including as post-petition lenders, stalking horse bidders, and plan sponsors, who aim to acquire distressed real estate assets in a tax-advantaged manner.

• Commercial Litigation. Litigate a wide range of complex real estate disputes in state and federal trial and appellate courts around the country, including cases arising out of distressed assets and foreclosures, workouts, and insolvencies; disputes between trustees, special and master servicers, lenders, and borrowers; complex landlord-tenant disputes, including the interplay between ground leases, subleases, and commercial financing; and major construction claims.
• Cozen O’Connor Public Strategies. Counsel distressed real estate clients on federal, state, and local government regulations and governmental assistance programs designed to address market upheavals, from the Trouble Asset Relief Program (TARP) to the Paycheck Protection Program (PPP).

Distinction

With legal issues that require multidisciplinary service and cross-practice collaboration, hiring a firm with a positive internal culture is not just a nicety — it is an imperative. Cozen O’Connor has been named to Newsweek’s list of America’s Most Loved Workplaces multiple years running and is the only Am Law 100 law firm to make it to the Top 100. A healthy workplace culture leads to demonstrably lower attorney attrition, continuity among service providers, better connectivity and communication between practices, and more focused and purposeful investment in clients’ long-term success.